Correlation Between DGTL Holdings and Carsales
Can any of the company-specific risk be diversified away by investing in both DGTL Holdings and Carsales at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining DGTL Holdings and Carsales into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DGTL Holdings and CarsalesCom Ltd ADR, you can compare the effects of market volatilities on DGTL Holdings and Carsales and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in DGTL Holdings with a short position of Carsales. Check out your portfolio center. Please also check ongoing floating volatility patterns of DGTL Holdings and Carsales.
Diversification Opportunities for DGTL Holdings and Carsales
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between DGTL and Carsales is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding DGTL Holdings and CarsalesCom Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom ADR and DGTL Holdings is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on DGTL Holdings are associated (or correlated) with Carsales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom ADR has no effect on the direction of DGTL Holdings i.e., DGTL Holdings and Carsales go up and down completely randomly.
Pair Corralation between DGTL Holdings and Carsales
Assuming the 90 days horizon DGTL Holdings is expected to generate 29.84 times more return on investment than Carsales. However, DGTL Holdings is 29.84 times more volatile than CarsalesCom Ltd ADR. It trades about 0.08 of its potential returns per unit of risk. CarsalesCom Ltd ADR is currently generating about 0.08 per unit of risk. If you would invest 11.00 in DGTL Holdings on August 26, 2024 and sell it today you would lose (10.40) from holding DGTL Holdings or give up 94.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 86.35% |
| Values | Daily Returns |
DGTL Holdings vs. CarsalesCom Ltd ADR
Performance |
| Timeline |
| DGTL Holdings |
| CarsalesCom ADR |
DGTL Holdings and Carsales Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DGTL Holdings and Carsales
The main advantage of trading using opposite DGTL Holdings and Carsales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DGTL Holdings position performs unexpectedly, Carsales can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Carsales will offset losses from the drop in Carsales' long position.| DGTL Holdings vs. Trivago NV | DGTL Holdings vs. YY Inc Class | DGTL Holdings vs. DouYu International Holdings | DGTL Holdings vs. Baidu Inc |
| Carsales vs. Trivago NV | Carsales vs. YY Inc Class | Carsales vs. DouYu International Holdings | Carsales vs. Baidu Inc |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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